DENVER, CO (MARKETWIRE via COMTEX News Network) -- Spicy Pickle Franchising, Inc. (OTCBB: SPKL), fast casual restaurant operator and franchisor of its Spicy Pickle and Bread Garden Urban Cafe brands, announced it has secured a $2,000,000 revolving credit line for operating capital.
The line is in the form of a convertible promissory note and secured loan agreement. Any outstanding indebtedness bears interest at the rate of 10%. The note will mature May 1, 2013 unless extended. The first interest only payment will not be due until September 1, 2010.
The conversion price is set at 10.5 cents, the closing share price on the date the note was signed. For every two shares received upon conversion, if any, the holder will receive a warrant to purchase one share at an initial price of 120% of the stock price during the 10 trading days prior to the election to convert. The warrant would expire in five years.
The company also reported that on May 13, 2010, it filed its first quarter 10Q with the Securities and Exchange Commission.
Revenue for the quarter ended March 31, 2010 totaled $973,151, down slightly from $1,003,595 in the year ago quarter. Franchise fees and royalties rose to $354,454 compared with $304,975 in the first quarter 2009. The company noted that most of the revenue is derived from the company's seven owned restaurants. In May, 2010, Spicy Pickle closed one of its restaurants and is looking for a site to relocate it.
Total restaurant and bakery operating costs were down slightly in the quarter, however, general and administrative expenses rose to $1,025,543 from $695,486, mainly due to stock based compensation expenses. Employee stock option expense was $129,879 in the quarter this year vs. $12,259 in the prior year's quarter and a $165,000 expense was recorded for shares issued to employees in lieu of salary.
The company's net loss attributable to common shareholders for the first quarter was $864,366 versus $588,650 in the year ago quarter, equal to one cent a share in both years, based on 82,494,274 weighted average shares outstanding in the quarter this year and 54,369,497 for the same three months last year.
For the quarter ended March 31, not reflecting the cash from the note, the company had total assets of $5.4 million with current assets of $952,000 and current liabilities of $1,795,000. Of its current liabilities, $610,500 was deferred franchise fee revenue and not a cash liability. These funds are taken into revenue when the franchisee opens the restaurant but they are available immediately as working capital. Shareholders' equity totaled $2.77 million, equal to 3.4 cents a share.
Just joining the company as CEO in April this year, Mark Laramie stated, "We view our first quarter efforts as building a foundation from which to grow and prosper. We are optimistic that we have the basic ingredients for a successful restaurant franchise company and we will be working diligently to improve Spicy Pickle's operations and results." Mr. Laramie also commented that "Some of our most positive elements include our proven brands, our greatly strengthened board, our committed management team and our strong franchise operators."
About Spicy Pickle(TM) and Bread Garden: Founded in 1999, Spicy Pickle Franchising, Inc. (OTCBB: SPKL) serves high quality meats and fine artisan breads, baked fresh daily, along with a wide choice of eight different cheeses, twenty-two different toppings, and fourteen proprietary spreads to create healthy and delicious panini and sub sandwiches with flavors from around the world. As a leading "fast-casual" concept, Spicy Pickle offers menu items that are far beyond traditional fast food but without the price point of casual dining. The hallmark of a Spicy Pickle restaurant is quality, service and an enjoyable atmosphere. The company is headquartered in Denver, Colorado, with restaurants open across 11 states and more in development nationwide. Spicy Pickle Franchising, Inc. also operates as franchisor for Bread Garden Urban Cafes, a bakery cafe concept with restaurants in the metropolitan Vancouver, Canada area. Bread Garden Urban Cafes serve coffee, pastries and breakfast items as well as lunch and dinner along with a wide variety of desserts and are found in typical high density urban settings along with specialty locations in two airports in British Columbia.
Forward-Looking Statements: Certain statements in this press release, including statements regarding the number of restaurants we intend to open, are forward-looking statements. We use words such as "anticipate," "believe," "could," "should," "estimate," "expect," "intend," "may," "predict," "project," "target," and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this press release are based on information available to us as of the date any such statements are made and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: factors that could affect our ability to achieve and manage our planned expansion, such as the availability of a sufficient number of suitable new restaurant sites and the availability of qualified franchisees and employees; risks relating to our expansion into new markets; the risk of food-borne illnesses and other health concerns about our food products; changes in the availability and costs of food; changes in consumer preferences, general economic conditions or consumer discretionary spending; the impact of federal, state or local government regulations relating to our franchisees and employees, and the sale of food or alcoholic beverages; the impact of litigation; our ability to protect our name and logo and other proprietary information; the potential effects of inclement weather; the effect of competition in the restaurant industry; and other risk factors described from time to time in our SEC reports.
SOURCE: Spicy Pickle Franchising, Inc.